What happens when your lender pulls your credit reports and there are debts listed there which are being reported incorrectly. Finding a debt being reported in error is not the kind of SURPRISE anyone wants to see when they are reviewing their Credit Report. The most common debts reported in error are:
- Late Payment
- Collection
- Judgment
Fortunately there is a process to correct the errors on your own.
So What Can Be Done To Correct Errors On A Credit Report?
Contact the Credit Reporting Company which your lender uses. That Credit Reporting Company will assist you in making the necessary disputes to correct how the item(s) is being reported on your Credit Report generally for free. Most Creditors report monthly to all three Credit Bureaus: Equifax, Experian, and TransUnion. Therefore, the dispute needs to be submitted to all three in order to correct the mistake and adjust the Credit Scores. You will need to send the Credit Reporting Company proof that the item(s) were paid. Then a dispute will be filed on your behalf with all three Credit Bureaus.
However, if you are not applying for a Mortgage, and therefore, do not have access to this free service, you need to do the following to correct the items reported incorrectly on your Credit Report.
- Write a letter of dispute to each of the three Credit Bureaus: Equifax, Experian, or TransUnion along with proof the items you are disputing as being reported incorrectly. The letter needs to include the Trade Line, Account Number(s), and reason why you believe it is reporting incorrectly.
- Under the Fair Credit Reporting Act, each Credit Bureaus must contact the Creditor or person the dispute is being filled against within 5 days of the receipt of the request. The Creditor or person the dispute is filled against then has to give a written reply back to the Credit Bureaus within 30 days of the date the dispute was filled.
- The Credit Bureaus then have 5 days from receipt of the creditor’s or person’s written reply, to provide a written report with their findings. They will also need to provide a copy of a revised Credit Report if changes were made.
So what happens if the procedure above is not followed? There are 3 possible scenarios:
- No response from the Creditor or person the dispute is filled against. If that happens the data is removed.
- The Creditor or person that the dispute is filled against shows proof they are correct. If that is the case the data remains.
- The Creditor or person the dispute was filled against acknowledges they were wrong or partially wrong, and they correct the item(s) they are reporting incorrectly.
In each of the above scenarios the person who submits the dispute must be notified by the Credit Bureaus of the results, but there is one little twist to the first scenario. If the Creditor or person who the dispute was filled against does not respond within the required time period, and the correction is made, the error can still show up later if the creditor at a later date decides to report the item again. So if the correction is made because the Creditor or person the dispute was filled against did not respond, the person who submitted the dispute must continue to monitor their Credit Report, because the error could show up again at a later date.
Everyone is entitled to one free Credit Report per year from each of the Credit Bureaus. It is wise to take advantage of this every year, so if a Creditor is reporting something incorrectly, or if fraud is going on, it can be addressed quickly.
Hopefully you will never have anything reported incorrectly on your credit report. But if there are errors just follow the steps above for What Can Be Done To Correct Errors On A Credit Report, and the errors should be corrected within 30 days.
If you are planning on looking for a home, you want to get in touch quickly with a lender who can help you with any corrections to your credit report and give you a pre-approval letter. If you need a list of lenders to interview, please give the Lise Howe Group a call at 240-401-5577 and just ask us for our suggestions. We work with lenders from all the major banks and mortgage brokers and we are happy to share our information.